One may hear of careers in accounting or finance used interchangeably, especially when searching for a career path. These two career options are popular among university graduates, and for good reason. However, accounting and finance have unique ways of working with and analyzing the same set of figures. Listed below is a guide explaining the differences between accounting and finance.
Finance manages money for individuals, governments, investments, and corporations. Finance graduates can work in areas like investment banking, financial analysis and planning, and wealth management. Finance professionals can work for individuals or businesses, ensuring adequate capital and optimal allocation of funds. Finance professionals attempt to create value for the business/corporation. They do this by managing assets/capital to earn better than expected returns. These professionals are ultimately responsible to shareholders.
Accounting professionals also can work for themselves, companies, or large corporations. They can also work with public accounting firms. Accountants audit all transactions for accuracy and monitor businesses to ensure proper practicing of accounting standards. After summarizing these correct entries, they help produce financial statements and verify that the reports are accurate. While accountants prepare financial statements, finance managers analyze the statements.
Another way of looking at accounting versus finance is the timeframe. Accountants look backward because they use past financial information when they prepare the reports. Interestingly, when these reports come out, the data is probably several months old. The goal of finance professionals, however, looks forward. Finance professionals have to look forward because their job is to predict the future.
Furthermore, a big difference between accounting and finance is the personalities of the people drawn to each discipline. People who can give much attention to detail and think about different potential scenarios tend to choose finance. On the other hand, a concern with accuracy and procedure-oriented thinking may need a career in accounting. Accounting professionals work with accruals, while finance professionals work with actual increases or decreases of cash.
Deciding what career to pursue or what kind of professional you want to be can be a confusing one. Perhaps the information above coupled with some self-inventory will help you make the best decision.